HealthEquity Reports Third Quarter Ended October 31, 2021 Financial Results

·23 min read

Highlights of the third quarter include:

  • Revenue of $180.0 million, an increase of less than one percent compared to $179.4 million in Q3 FY21.

  • Net loss of $5.0 million, compared to net income of $1.8 million in Q3 FY21, with non-GAAP net income of $28.9 million, a decrease of 10% compared to $32.2 million in Q3 FY21.

  • Net loss per diluted share of $0.06, compared to net income per diluted share of $0.02 in Q3 FY21, with non-GAAP net income per diluted share of $0.35, compared to $0.41 in Q3 FY21.

  • Adjusted EBITDA of $61.1 million, the same as in Q3 FY21.

  • 6.2 million HSAs, an increase of 14% compared to Q3 FY21.

  • Total HSA Assets of $16.4 billion, an increase of 32% compared to Q3 FY21.

  • 13.3 million Total Accounts, including both HSAs and complementary CDB accounts, an increase of 6% compared to Q3 FY21.

  • The Company closed its acquisition of the Fifth Third Bank HSA portfolio on September 29, 2021 and its acquisition of Further on November 1, 2021.

  • The Company issued $600 million aggregate principal amount of 4.50% Senior Notes due 2029 and refinanced its credit facility.

DRAPER, Utah, Dec. 06, 2021 (GLOBE NEWSWIRE) -- HealthEquity, Inc. (NASDAQ: HQY) ("HealthEquity" or the "Company"), the nation's largest health savings account ("HSA") non-bank custodian, today announced financial results for its third quarter ended October 31, 2021.

"The HealthEquity team delivered another strong quarter of HSA growth, with new HSA sales of 151,000 in the third quarter and 446,000 in the year to date," said Jon Kessler, President and CEO of HealthEquity. "Adding to this year’s strong organic growth, we have on-boarded 160,000 new HSAs from Fifth Third Bank in the third quarter and 580,000 from Further in November to start our fourth quarter. HSA members have added nearly another $1 billion to their HSAs this quarter, and their HSA investments have grown significantly. We believe we are poised for a strong finish to this year’s selling season, continuing to outpace market growth."

Third quarter financial results

Revenue for the third quarter ended October 31, 2021 was $180.0 million, an increase of less than one percent compared to $179.4 million for the third quarter ended October 31, 2020. Revenue this quarter included: service revenue of $102.7 million, custodial revenue of $49.0 million, and interchange revenue of $28.2 million.

HealthEquity reported a net loss of $5.0 million, or $0.06 per diluted share, and non-GAAP net income of $28.9 million, or $0.35 per diluted share, for the third quarter ended October 31, 2021. The Company reported net income of $1.8 million, or $0.02 per diluted share, and non-GAAP net income of $32.2 million, or $0.41 per diluted share, for the third quarter ended October 31, 2020.

Adjusted EBITDA was $61.1 million for the third quarter ended October 31, 2021, the same as in the third quarter ended October 31, 2020. Adjusted EBITDA was 34% of revenue for each of the third quarters ended October 31, 2021 and 2020.

Account and asset metrics

HealthEquity reported sales of 151,000 new HSAs in the third quarter ended October 31, 2021, compared to 104,000 in the third quarter ended October 31, 2020. HSAs as of October 31, 2021 were approximately 6.2 million, an increase of 14% year over year, including 431,000 HSAs with investments, an increase of 43% year over year. Total Accounts as of October 31, 2021 were 13.3 million, including 7.1 million other consumer-directed benefits ("CDBs").

Total HSA Assets as of October 31, 2021 were $16.4 billion, an increase of 32% year over year. Total HSA Assets included $10.5 billion of HSA cash and $6.0 billion of HSA investments. Client-held funds, which are deposits held on behalf of our Clients to facilitate administration of our CDBs, and from which we generate custodial revenue, were $0.8 billion as of October 31, 2021.

HealthSavings HSA portfolio acquisition

HealthEquity also announced it has entered into a definitive agreement with Health Savings Administrators, L.L.C. (“HealthSavings”) to transition the custody of HealthSavings’ HSA portfolio to HealthEquity. The definitive agreement provides a $60 million purchase price for nearly $1.3 billion of HSA assets held in approximately 87,000 HSAs. Given that a significant portion of the HSA assets are currently invested, HealthSavings and HealthEquity are working closely to coordinate an in-kind transfer of most of the invested assets. The transition of HealthSavings’ HSAs to the HealthEquity platform is expected to be completed in the first quarter of fiscal 2023. Willkie Farr & Gallagher LLP is serving as legal advisor to HealthEquity. HealthSavings has engaged Raymond James & Associates, Inc. as financial advisor and Ellenoff Grossman & Schole LLP as its legal advisor.

WageWorks integration

HealthEquity completed its acquisition of WageWorks on August 30, 2019. As of October 31, 2021, we have achieved approximately $75 million of the approximately $80 million in annualized ongoing net synergies we expect to achieve by the end of fiscal year 2022.

Business outlook

For the fiscal year ending January 31, 2022, management expects revenues of $750 million to $755 million. Its outlook for net loss is between $36 million and $33 million, resulting in net loss of $0.43 to $0.40 per diluted share. Its outlook for non-GAAP net income, calculated using the method described below, is between $108 million and $112 million, resulting in non-GAAP net income per diluted share of $1.30 to $1.35 (based on an estimated 83 million diluted weighted-average shares outstanding). Management expects Adjusted EBITDA of $230 million to $235 million. This outlook includes the impact of the Fifth Third Bank HSA portfolio, which closed on September 29, 2021, and the Further acquisition, which closed on November 1, 2021. This outlook also includes the impact of the $600 million aggregate principal amount of 4.50% Senior Notes due 2029 and the refinanced credit facility.

See “Non-GAAP financial information” below for definitions of our Adjusted EBITDA and non-GAAP net income. A reconciliation of the non-GAAP financial measures used throughout this release to the most comparable GAAP financial measures is included with the financial tables at the end of this release.

Conference call

HealthEquity management will host a conference call at 4:30 pm (Eastern Time) on Monday, December 6, 2021 to discuss the third quarter 2022 financial results. The conference call will be accessible by dialing 844-791-6252, or 661-378-9636 for international callers, and referencing conference ID 5354046. A live audio webcast of the call will also be available on the investor relations section of our website at http://ir.healthequity.com.

Non-GAAP financial information

To supplement our financial information presented on a GAAP basis, we disclose non-GAAP financial measures, including Adjusted EBITDA, non-GAAP net income, and non-GAAP net income per diluted share.

  • Adjusted EBITDA is adjusted earnings before interest, taxes, depreciation and amortization, amortization of acquired intangible assets, stock-based compensation expense, merger integration expenses, acquisition costs, gains and losses on equity securities, and other certain non-operating items.

  • Non-GAAP net income is calculated by adding back to GAAP net income (loss) before income taxes the following items: amortization of acquired intangible assets, stock-based compensation expense, merger integration expenses, acquisition costs, gains and losses on equity securities, and losses on extinguishment of debt, and subtracting a non-GAAP tax provision using a normalized non-GAAP tax rate.

  • Non-GAAP net income per diluted share is calculated by dividing non-GAAP net income by diluted weighted-average shares outstanding.

Non-GAAP financial measures should be considered in addition to results prepared in accordance with GAAP and should not be considered as a substitute for, or superior to, GAAP results. We believe that these non-GAAP financial measures provide useful information to management and investors regarding certain financial and business trends relating to the Company's financial condition and results of operations. The Company cautions investors that non-GAAP financial information, by its nature, departs from GAAP; accordingly, its use can make it difficult to compare current results with results from other reporting periods and with the results of other companies. In addition, while amortization of acquired intangible assets is being excluded from non-GAAP net income, the revenue generated from those acquired intangible assets is not excluded. Whenever we use these non-GAAP financial measures, we provide a reconciliation of the applicable non-GAAP financial measure to the most closely applicable GAAP financial measure. Investors are encouraged to review the related GAAP financial measures and the reconciliation of the non-GAAP financial measures to their most directly comparable GAAP financial measure as detailed in the tables below.

About HealthEquity

HealthEquity and its subsidiaries administer HSAs and other consumer-directed benefits for our more than 13 million accounts in partnership with employers, benefits advisors, and health and retirement plan providers who share our mission to connect health and wealth and value our culture of remarkable “Purple” service. For more information, visit www.healthequity.com.

Forward-looking statements

This press release contains “forward-looking statements” within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995, including but not limited to, statements regarding our industry, business strategy, plans, goals and expectations concerning our markets and market position, product expansion, future operations, expenses and other results of operations, revenue, margins, profitability, acquisition synergies, future efficiencies, tax rates, capital expenditures, liquidity and capital resources and other financial and operating information. When used in this discussion, the words “may,” “believes,” “intends,” “seeks,” “aims,” “anticipates,” “plans,” “estimates,” “expects,” “should,” “assumes,” “continues,” “could,” “will,” “future” and the negative of these or similar terms and phrases are intended to identify forward-looking statements in this press release.

Forward-looking statements reflect our current expectations regarding future events, results or outcomes. These expectations may or may not be realized. Although we believe the expectations reflected in the forward-looking statements are reasonable, we can give you no assurance these expectations will prove to be correct. Some of these expectations may be based upon assumptions, data or judgments that prove to be incorrect. Actual events, results and outcomes may differ materially from our expectations due to a variety of known and unknown risks, uncertainties and other factors. Although it is not possible to identify all of these risks and factors, they include, among others, risks related to the following:

  • the impact of the ongoing COVID-19 pandemic on the Company, its operations and its financial results;

  • our ability to realize the anticipated financial and other benefits from combining the operations of WageWorks and Further with our business in an efficient and effective manner;

  • our ability to integrate the Further business successfully;

  • our ability to compete effectively in a rapidly evolving healthcare and benefits administration industry;

  • our dependence on the continued availability and benefits of tax-advantaged health savings accounts and other consumer-directed benefits;

  • our ability to successfully identify, acquire and integrate additional portfolio purchases or acquisition targets;

  • the significant competition we face and may face in the future, including from those with greater resources than us;

  • our reliance on the availability and performance of our technology and communications systems;

  • recent and potential future cybersecurity breaches of our technology and communications systems and other data interruptions, including resulting costs and liabilities, reputational damage and loss of business;

  • the current uncertain healthcare environment, including changes in healthcare programs and expenditures and related regulations;

  • our ability to comply with current and future privacy, healthcare, tax, ERISA, investment adviser and other laws applicable to our business;

  • our reliance on partners and third-party vendors for distribution and important services;

  • our ability to develop and implement updated features for our technology and communications systems and successfully manage our growth;

  • our ability to protect our brand and other intellectual property rights; and

  • our reliance on our management team and key team members.

For a detailed discussion of these and other risk factors, please refer to the risks detailed in our filings with the Securities and Exchange Commission, including, without limitation, our Annual Report on Form 10-K for the fiscal year ended January 31, 2021 and subsequent periodic and current reports. Past performance is not necessarily indicative of future results. We undertake no intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Forward-looking statements should not be relied upon as representing our views as of any date subsequent to the date of this press release.

Investor Relations Contact
Richard Putnam
801-727-1209
rputnam@healthequity.com



HealthEquity, Inc. and its subsidiaries
Condensed consolidated balance sheets

(in thousands, except par value)

October 31, 2021

January 31, 2021

(unaudited)

Assets

Current assets

Cash and cash equivalents

$

649,129

$

328,803

Accounts receivable, net of allowance for doubtful accounts of $6,063 and $4,239 as of October 31, 2021 and January 31, 2021, respectively

84,083

72,767

Other current assets

30,919

58,607

Total current assets

764,131

460,177

Property and equipment, net

24,930

29,106

Operating lease right-of-use assets

81,150

89,508

Intangible assets, net

820,946

767,003

Goodwill

1,363,549

1,327,193

Other assets

44,908

37,420

Total assets

$

3,099,614

$

2,710,407

Liabilities and stockholders’ equity

Current liabilities

Accounts payable

$

5,244

$

1,614

Accrued compensation

32,695

50,670

Accrued liabilities

49,879

75,880

Current portion of long-term debt

6,563

62,500

Operating lease liabilities

12,693

14,037

Total current liabilities

107,074

204,701

Long-term liabilities

Long-term debt, net

923,501

924,217

Operating lease liabilities, non-current

67,836

74,224

Other long-term liabilities

18,953

8,808

Deferred tax liability

110,400

119,729

Total long-term liabilities

1,120,690

1,126,978

Total liabilities

1,227,764

1,331,679

Commitments and contingencies

Stockholders’ equity

Preferred stock, $0.0001 par value, 100,000 shares authorized, no shares issued and outstanding as of October 31, 2021 and January 31, 2021, respectively

Common stock, $0.0001 par value, 900,000 shares authorized, 83,586 and 77,168 shares issued and outstanding as of October 31, 2021 and January 31, 2021, respectively

8

8

Additional paid-in capital

1,662,965

1,158,372

Accumulated earnings

208,877

220,348

Total stockholders’ equity

1,871,850

1,378,728

Total liabilities and stockholders’ equity

$

3,099,614

$

2,710,407


HealthEquity, Inc. and its subsidiaries
Condensed consolidated statements of operations and comprehensive income (loss) (unaudited)

Three months ended October 31,

Nine months ended October 31,

(in thousands, except per share data)

2021

2020

2021

2020

Revenue

Service revenue

$

102,733

$

104,562

$

314,449

$

319,638

Custodial revenue

49,006

48,544

144,760

142,352

Interchange revenue

28,215

26,245

94,050

83,411

Total revenue

179,954

179,351

553,259

545,401

Cost of revenue

Service costs

66,217

65,936

204,183

202,195

Custodial costs

5,734

4,762

15,567

14,805

Interchange costs

4,683

4,095

15,102

13,985

Total cost of revenue

76,634

74,793

234,852

230,985

Gross profit

103,320

104,558

318,407

314,416

Operating expenses

Sales and marketing

12,726

12,880

42,288

36,502

Technology and development

38,070

30,758

111,437

92,490

General and administrative

20,004

22,099

63,503

61,590

Amortization of acquired intangible assets

19,642

19,126

59,745

56,905

Merger integration

13,244

8,193

38,422

31,328

Total operating expenses

103,686

93,056

315,395

278,815

Income (loss) from operations

(366

)

11,502

3,012

35,601

Other expense

Interest expense

(11,881

)

(6,952

)

(25,824

)

(28,110

)

Other income (expense), net

3,122

(421

)

(164

)

(2,009

)

Total other expense

(8,759

)

(7,373

)

(25,988

)

(30,119

)

Income (loss) before income taxes

(9,125

)

4,129

(22,976

)

5,482

Income tax provision (benefit)

(4,087

)

2,340

(11,505

)

2,015

Net income (loss) and comprehensive income (loss)

$

(5,038

)

$

1,789

$

(11,471

)

$

3,467

Net income (loss) per share:

Basic

$

(0.06

)

$

0.02

$

(0.14

)

$

0.05

Diluted

$

(0.06

)

$

0.02

$

(0.14

)

$

0.05

Weighted-average number of shares used in computing net income (loss) per share:

Basic

83,551

76,701

82,939

73,358

Diluted

83,551

77,845

82,939

74,665


HealthEquity, Inc. and its subsidiaries
Condensed consolidated statements of cash flows (unaudited)

Nine months ended October 31,

(in thousands)

2021

2020

Cash flows from operating activities:

Net income (loss)

$

(11,471

)

$

3,467

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

Depreciation and amortization

98,364

85,485

Stock-based compensation

41,700

30,313

Amortization of debt discount and issuance costs

3,616

3,818

Loss on extinguishment of debt

4,044

Change in fair value of contingent consideration

(2,147

)

Other non-cash items

(750

)

1,727

Deferred taxes

(8,765

)

(973

)

Changes in operating assets and liabilities:

Accounts receivable, net

(10,090

)

8,063

Other assets

19,888

3,309

Operating lease right-of-use assets

8,944

8,344

Accrued compensation

(18,098

)

(15,251

)

Accounts payable, accrued liabilities, and other current liabilities

(34,023

)

(7,936

)

Operating lease liabilities, non-current

(6,808

)

(8,361

)

Other long-term liabilities

6,034

8,712

Net cash provided by operating activities

90,438

120,717

Cash flows from investing activities:

Acquisitions, net of cash acquired

(49,533

)

Purchases of software and capitalized software development costs

(49,033

)

(37,242

)

Purchases of property and equipment

(7,284

)

(11,388

)

Acquisition of intangible member assets

(64,463

)

(28,100

)

Proceeds from sale of equity securities

2,367

Net cash used in investing activities

(167,946

)

(76,730

)

Cash flows from financing activities:

Principal payments on long-term debt

(1,003,125

)

(223,438

)

Proceeds from issuance of long-term debt

950,000

Payment of debt issuance costs

(11,846

)

Proceeds from follow-on equity offering, net of payments for offering costs

456,642

286,779

Settlement of client-held funds obligation, net

(1,565

)

(4,189

)

Proceeds from exercise of common stock options

7,728

4,491

Net cash provided by financing activities

397,834

63,643

Increase in cash and cash equivalents

320,326

107,630

Beginning cash and cash equivalents

328,803

191,726

Ending cash and cash equivalents

$

649,129

$

299,356


HealthEquity, Inc. and its subsidiaries
Condensed consolidated statements of cash flows (unaudited) (continued)

Nine months ended October 31,

(in thousands)

2021

2020

Supplemental cash flow data:

Interest expense paid in cash

$

13,685

$

22,849

Income tax payments (refunds), net

(5,926

)

1,053

Supplemental disclosures of non-cash investing and financing activities:

Purchases of software and capitalized software development costs included in accounts payable, accrued liabilities, or accrued compensation

3,708

1,346

Purchases of property and equipment included in accounts payable or accrued liabilities

479

167

Purchases of intangible member assets included in accounts payable or accrued liabilities

2,281

289

Contingent consideration recognized at acquisition

8,147

Exercise of common stock options receivable

1

89

Decrease in goodwill due to measurement period adjustments, net

19

5,838


Stock-based compensation expense (unaudited)

Total stock-based compensation expense included in the condensed consolidated statements of operations and comprehensive income (loss) is as follows:

Three months ended October 31,

Nine months ended October 31,

(in thousands)

2021

2020

2021

2020

Cost of revenue

$

3,076

$

2,209

$

8,547

$

5,737

Sales and marketing

829

2,035

5,677

4,810

Technology and development

3,458

2,641

10,164

8,051

General and administrative

5,921

4,594

17,312

11,715

Other expense (1)

342

Total stock-based compensation expense

$

13,284

$

11,479

$

42,042

$

30,313

(1) Equity-based awards exchanged for cash in connection with the Luum acquisition.


Total Accounts (unaudited)

(in thousands, except percentages)

October 31, 2021

October 31, 2020

% Change

January 31, 2021

HSAs

6,241

5,460

14

%

5,782

New HSAs from sales - Quarter-to-date

151

104

45

%

370

New HSAs from sales - Year-to-date

446

317

41

%

687

New HSAs from acquisitions - Year-to-date

160

n/a

HSAs with investments

431

302

43

%

333

CDBs

7,085

7,060

0

%

7,028

Total Accounts

13,326

12,520

6

%

12,810

Average Total Accounts - Quarter-to-date

13,247

12,084

10

%

12,659

Average Total Accounts - Year-to-date

13,158

12,429

6

%

12,604


HSA Assets (unaudited)

(in millions, except percentages)

October 31, 2021

October 31, 2020

% Change

January 31, 2021

HSA cash with yield (1)

$

10,410

$

8,759

19

%

$

9,875

HSA cash without yield (2)

59

258

(77

)

%

244

Total HSA cash

10,469

9,017

16

%

10,119

HSA investments with yield (1)

5,900

3,255

81

%

4,078

HSA investments without yield (2)

59

168

(65

)

%

138

Total HSA investments

5,959

3,423

74

%

4,216

Total HSA Assets

16,428

12,440

32

%

14,335

Average daily HSA cash with yield - Year-to-date

9,925

8,445

18

%

8,599

Average daily HSA cash with yield - Quarter-to-date

$

10,099

$

8,672

16

%

$

9,060

(1) HSA Assets that generate custodial revenue.

(2) HSA Assets that do not generate custodial revenue.


Client-held funds (unaudited)

(in millions, except percentages)

October 31, 2021

October 31, 2020

% Change

January 31, 2021

Client-held funds (1)

$

811

$

798

2

%

$

986

Average daily Client-held funds - Year-to-date (1)

849

847

%

847

Average daily Client-held funds - Quarter-to-date (1)

796

819

(3

)

%

848

(1) Client-held funds that generate custodial revenue.


Net income (loss) reconciliation to Adjusted EBITDA (unaudited)

Three months ended October 31,

Nine months ended October 31,

(in thousands)

2021

2020

2021

2020

Net income (loss)

$

(5,038

)

$

1,789

$

(11,471

)

$

3,467

Interest income

(478

)

(174

)

(1,419

)

(850

)

Interest expense

11,881

6,952

25,824

28,110

Income tax provision (benefit)

(4,087

)

2,340

(11,505

)

2,015

Depreciation and amortization

13,904

10,253

38,619

28,580

Amortization of acquired intangible assets

19,642

19,126

59,745

56,905

Stock-based compensation expense

13,284

11,479

41,700

30,313

Merger integration expenses

13,244

8,193

38,422

31,328

Acquisition costs (gains) (1)

(2,687

)

13

4,917

79

Gain on equity securities

(1,677

)

Other (2)

1,422

1,168

2,421

4,202

Adjusted EBITDA

$

61,087

$

61,139

$

185,576

$

184,149

(1) For the nine months ended October 31, 2021, acquisition costs included $0.3 million of stock-based compensation expense.

(2) For the three months ended October 31, 2021, other consisted of amortization of incremental costs to obtain a contract of $0.8 million and other expenses, net, of $0.6 million. For the three months ended October 31, 2020, other consisted of amortization of incremental costs to obtain a contract of $0.6 million and other expenses, net, of $0.6 million. For the nine months ended October 31, 2021, other consisted of amortization of incremental costs to obtain a contract of $3.5 million, partially offset by other income, net, of $1.0 million. For the nine months ended October 31, 2020, other consisted of amortization of incremental costs to obtain a contract of $1.4 million and other expenses, net, of $2.8 million.


Reconciliation of net loss outlook to Adjusted EBITDA outlook (unaudited)

Outlook for the year ending

(in millions)

January 31, 2022

Net loss

$(36) - (33)

Interest income

(2)

Interest expense

36

Income tax benefit

(16) - (14)

Depreciation and amortization

53

Amortization of acquired intangible assets

84

Stock-based compensation expense

57

Merger integration expenses

48

Other expense

6

Adjusted EBITDA

$230 - 235


Reconciliation of net income (loss) to non-GAAP net income (unaudited)

Three months ended October 31,

Nine months ended October 31,

Outlook for the year ending

(in millions, except per share data)

2021

2020

2021

2020

January 31, 2022

Net income (loss)

$

(5

)

$

2

$

(11

)

$

3

$(36) - (33)

Income tax provision (benefit)

(4

)

2

(12

)

2

(16) - (14)

Income (loss) before income taxes - GAAP

(9

)

4

(23

)

5

(52) - (47)

Non-GAAP adjustments:

Amortization of acquired intangible assets

20

19

60

57

84

Stock-based compensation expense

13

12

42

30

57

Merger integration expenses

13

8

38

32

48

Acquisition costs (gains)

(2

)

5

5

Gain on equity securities

(2

)

(2)

Loss on extinguishment of debt

4

4

4

Total adjustments to income (loss) before income taxes - GAAP

48

39

147

119

196

Income before income taxes - Non-GAAP

39

43

124

124

144 - 149

Income tax provision - Non-GAAP (1)

10

11

31

31

36 - 37

Non-GAAP net income

29

32

93

93

108 - 112

Diluted weighted-average shares

84

78

83

75

83

Non-GAAP net income per diluted share (2)

$

0.35

$

0.41

$

1.12

$

1.25

$1.30 - 1.35

(1) The Company utilizes a normalized non-GAAP tax rate to provide better consistency across the interim reporting periods within a given fiscal year by eliminating the effects of non-recurring and period-specific items, which can vary in size and frequency, and which are not necessarily reflective of the Company’s longer-term operations. The normalized non-GAAP tax rate applied to each period presented was 25%. The Company may adjust its non-GAAP tax rate as additional information becomes available and in conjunction with any other significant events occurring that may materially affect this rate, such as merger and acquisition activity, changes in business outlook, or other changes in expectations regarding tax regulations.

(2) Non-GAAP net income per diluted share may not calculate due to rounding of non-GAAP net income and diluted weighted-average shares.


Certain terms

Term

Definition

HSA

A financial account through which consumers spend and save long-term for healthcare on a tax-advantaged basis.

CDB

Consumer-directed benefits offered by employers, including flexible spending and health reimbursement arrangements (“FSAs” and “HRAs”), Consolidated Omnibus Budget Reconciliation Act (“COBRA”) administration, commuter and other benefits.

HSA member

Consumers with HSAs that we serve.

Total HSA Assets

HSA members' deposits with our federally insured custodial depository partners and custodial cash placed in annuity contracts with our insurance company partners. Total HSA Assets also includes HSA members' investments in mutual funds through our custodial investment fund partner.

Client

Our employer clients.

Total Accounts

The sum of HSAs and CDBs on our platforms.

Client-held funds

Deposits held on behalf of our Clients to facilitate administration of our CDBs.

Network Partner

Our health plan partners, benefits administrators, and retirement plan recordkeepers.

Adjusted EBITDA

Adjusted earnings before interest, taxes, depreciation and amortization, amortization of acquired intangible assets, stock-based compensation expense, merger integration expenses, acquisition costs, gains and losses on equity securities, and other certain non-operating items.

Non-GAAP net income

Calculated by adding back to GAAP net income (loss) before income taxes the following items: amortization of acquired intangible assets, stock-based compensation expense, merger integration expenses, acquisition costs, gains and losses on equity securities, and losses on extinguishment of debt, and subtracting a non-GAAP tax provision using a normalized non-GAAP tax rate.

Non-GAAP net income per diluted share

Calculated by dividing non-GAAP net income by diluted weighted-average shares outstanding.


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